RioZim says to pay $8mln for Dalny, deal to raise gold output by 100kg per month

RioZim says to pay $8mln for Dalny, deal to raise gold output by 100kg per month

HARARE, January 26 (The Source) – Resources group RioZim says it will pay $8 million for Falcon Gold’s Dalny Mine, a deal which will double its asset value and increase gold output by 100 kilogrammes per month after a year.

The agreement, which was first announced in October last year, involves the purchase of Falgold subsidiary, Palatial Gold Investments which owns the Dalny Mine Complex. The complex includes the mine, a gold processing plant, several surrounding gold claims as well as equipment and a mining compound.

Dalny has been under care and maintenance since August 2013.

The deal involves RioZim also assuming Dalny’s liabilities of $2,2 million.

“The acquisition will be done by purchasing 100% of the issued share capital of Palatial Gold and its loan accounts. The purchase consideration for the shares of Palatial Gold shall be the sum of US$250,000 and the consideration for the cession of the loan accounts shall be the sum of US$7,750,000,” said RioZim in a statement on Thursday.

“The consideration for the cession of the loan accounts will be reduced by the agreed cash liabilities as detailed in the Take-Over Balance Sheet amounting to circa US$2,2 million as at 31 August 2016.”

The transaction will more than double RioZim’s gold subsidiary Net Asset Value from $4,4 million to $9,5 million.

RioZim will pay $2 million dollars exclusive of the initial deposit within a month after the approval of the transaction. So far, it has paid a deposit of $200,000, in June last year.

The company will also pay $3 million dollars in installments of $250,000, which has to be paid off in less than 24 months.

RioZim leased Dalny Processing Plant in 2015 to process ore mined from its Cam and Motor Pit which saw gold production increasing by 76 percent in the first half of 2016.

DMC gold processing plant has a minimum capacity of 500 tonnes of ore per day.

The transaction will also increase gold production at RioGold.

“It is anticipated that the conclusion of this transaction will see RioGold producing additional gold of approximately 50 kilogrammes per month for the first 12 months and 100 kilogrammes per month thereafter,” said RioZim.

For Falgold, which is 84,7 percent owned by Canadian-listed New Dawn Mining Corporation, the deal would raise working capital to renovate the group’s infrastructure and increase production at its remaining operations at Turk Mine near Bulawayo and the Golden Quarry Mine in Shurugwi.